Unemployment has fallen for the first time in almost a year, raising hopes of a spring bounce in the UK's fragile economy.

The Office for National Statistics said unemployment on the government's preferred International Labour Organisation measure declined by 35,000 in the three months to February to 2.65 million – the first fall since May 2011. The unemployment rate was 8.3%, down by 0.1 percentage points.

The number of people claiming unemployment benefit is still rising, however, according to the ONS. The total number of people in receipt of jobseeker's allowance was 1.61 million in March, up by a modest 3,600 on a month earlier.

Howard Archer, of consultancy IHS Global Insight, said: "Overall the latest jobs data are relatively encouraging overall and supportive to hopes that the economy has returned to underlying modest growth."

Official figures to be published next Wednesday will reveal whether the economy expanded in the first three months of 2012. A negative number would signal recession.

Youth unemployment, which has been a political flashpoint, also declined slightly, by 9,000 in the three months to February (the most up-to-date figures the ONS provides), leaving a total of 1.03 million 16- to 24-year-olds looking for work. The unemployment rate for this age group was 22.2%, down from 22.3% three months earlier.

However, there was a fresh increase in the number of 18- to 24-year-olds who have been unemployed for a long period. In March, there were 54,700 young people who had been claiming jobseeker's allowance for more than 12 months, up from 49,500 a month earlier.

Jonathan Portes, director of the National Institute for Economic and Social Research, has suggested that the sharp rise in this measure could reveal problems with the government's Work Programme, which outsources the job of tackling long-term unemployment to a series of private sector providers.

The data also underlines the squeeze on living standards faced by many households. Average pay across the economy has risen by just 1.1% in the past year, dragged down by weaker City bonuses than a year ago. Excluding bonuses, pay increased by 1.6% – less than half the pace of inflation.